Aww, that sucks, Mel! I would go ahead and write the story the way you want to write it. You might contact the other writer and just tell her. This thread is here as "proof" that you've had this idea going for awhile before posting it.
I don't know that it's happened to me where I've thought of an idea and then found a similar story before getting mine up before... but I have worried that people would think I was copying before, and I have also been contacted by other authors worrying that people would think they were copying me.
Broken was totally inspired by Swollen Issues, and I have always admitted that, but I didn't set out to COPY Swollen Issues. I wanted to take the inspiration and write a story that would make my readers feel the same way I did when I read Swollen, but I obviously wanted to do something different with it so that I wouldn't be copying. There were a lot of similarities between the two at first, but I took Broken in a different direction, and by the end of the two series, hardly any similarities at all.
Awhile after I started writing Code Blue, Kat or Amy (I don't think either of them are on here, but some of you know who I'm talking about) contacted me about their Backstreet General series, which had the same premise of the Boys being doctors. They had been working on it for about as long as we had been working on CB, without realizing our story existed, and they were worried we would see their stories and think they had copied when they hadn't. It didn't bother me because I knew both of them, knew they wouldn't do that, and could see that their story was similar only in the basic premise, not the way it was written or actual storylines.
I don't think I've ever been totally copied, except the blatant plagiarism of Tanja.